The SEC has carefully scrutinized fund managers’ disclosures to investors for years to ensure managers are making required disclosures; those disclosures are accurate and complete; and they match managers’ actual operations. In addition, the SEC will raise an eyebrow, so to speak, if a manager gives certain information to some investors but not others – especially if that information gives those select investors a financial advantage. In today’s economic climate, managers should expect heightened scrutiny of any selective disclosures. The Private Equity Law Report spoke to Philip Moustakis
, counsel at Seward & Kissel and former Senior Counsel in the SEC’s Division of Enforcement, about increases in investor inquiries during the pandemic; the factors managers should consider when deciding what information to provide to investors; practical steps managers can take to avoid pitfalls when responding to investor inquiries; the SEC’s focus on selective disclosures; and the importance of documenting all communications with investors. For additional commentary from Seward & Kissel attorneys, see “Affiliate Versus Third Party Debate and Other Topics in Transfer Right Provision Negotiations
” (Jul. 16, 2019); and “When and How Are Fund Managers Required to Disclose Deficiency Letters to Investors? (Part Three of Three)
” (Apr. 23, 2019).